Women-Owned Small Businesses Doubled in Two Decades (and 5 Other Interesting Statistics)

One recent eye-catching statistic shows women-owned small businesses more than doubled during the last two decades, demonstrating their increasing role in the U.S. economy. A recent study commissioned by American Express found that from 1997 to 2017 the number of small businesses grew by 44 percent, while the number of women-owned small businesses grew by 114 percent.

The Federal Reserve’s more recent small business survey on women-owned employer firms (small businesses that have at least one employee besides the owner) offered other interesting statistics. This survey compares majority women-owned small businesses (“women-owned small businesses”) with majority men-owned small businesses (“men-owned small businesses”) and included the five following points:

• Women-owned small businesses tend to be younger than men-owned small businesses. 37 percent of women-owned small businesses have been in operation five or fewer years compared to 32 percent of men-owned small businesses. 61 percent of women-owned small businesses have been in operation for 10 or fewer years compared to 51 percent of men-owned small businesses.
• Women-owned small businesses tend to be smaller than men-owned small businesses. 22 percent of women-owned small businesses have revenues of $1 million or more compared to 36 percent of men-owned small businesses. 10 percent of women-owned small businesses have 20 or more employees compared to 16 percent of men-owned small businesses.
• Women-owned small businesses are more than twice as likely to be in health care or education than men-owned small businesses. 21 percent of women-owned small businesses are in health care and education compared to 10 percent of men-owned small businesses.

• Women-owned small businesses are less likely than men-owned small businesses to use external financing as a primary funding source. 12 percent of women-owned small businesses use external financing as a primary funding source compared to 16 percent of men-owned small businesses.
• Women-owned small businesses are more likely than men-owned small businesses to report a funding gap. 64 percent of women-owned small businesses reported a funding gap (meaning they received only “some” or “none” of the financing they sought) compared to 56 percent of men-owned small businesses. This disparity holds even among low credit risk (as defined by the Federal Reserve) small businesses?52 percent of low credit risk women-owned small businesses reported a funding gap compared to 43 percent of low credit risk men-owned small businesses.

Small Business Week is a good opportunity to recognize the growing number of women-owned small businesses in the U.S. economy. These small businesses tend to be younger, smaller, and more likely to report funding gaps. Ensuring adequate access to financing for small businesses can promote growth for all.